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Presented
by
Graham Moore
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Who we are
Lucas Fettes& Partners
Authorised andregulated by the
Financial ConductAuthority
National Firm ofEmployee Benefit
Consultants
Established 19809 offices in the UK
IndependentFinancial Advisers
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Appointed to deliver pension solutionsfor NCVO members in April 2011
Open to all voluntary organisations
Affinity Group Terms
In partnership
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Overview ofLegislation
Contents
LegalRequirements
Background &
Challenges
Company
Proposition
Next Steps
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Setting the scene
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Facts & Figures
Male aged 65Average life expectancy 20 yrs
Current Basic State Pension - 113.10 2014/15
BSP represents 24% of annual average wage
Females born today4/10100 yrs old
Proposed changes
Proposed Reforms:
Increase in SPA66 from 2020, 67 from 2024/6 & 68 from 2038
Universal fixed rate pension - 144.00 p.w. from 2017
35 yrs NIC required
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What are your plans ?
Will you have to continueworking beyond the SPA?
Wish to retire with sufficientincome?
Consider what you wantto achieve
OR
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Eligibility criteria
Contribution criteria
Commenced October 2012
Automatic Enrolment from staging date
Auto-Enrolment overview
Compliance of regulations
Penalties
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Assessing your workers
Worker type Age band Earnings Enrolment DutyEmployer
Contributions
Eligible jobholders 22 - SPA 10,000+
Must be
automaticallyenrolled
Non-eligible
jobholders
1621 or
SPA74 10,000+
Have a right to opt in
1674 Above 5,772 but
below 10,000
Entitled workers 16 - 74 Up to 5,772 Have a right to join
Mattcan you change this to look like the other slides (see previous)
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Certification
Tier Total Contribution Based on Min employer % Employee %
1 9% Basic pay 4% 5%
2 8% Basic pay* 3% 5%
3 7% All pay 3% 4%
* Providing basic pay represents at least 85% of payroll
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Opting Out and Re-enrolment
Eligible jobholders can opt-out
1 month joining window
Ongoing responsibility tomaintain the enrolment, opt inand out process.
Periodically employers will need
to re-enrol workers
Auto Enrolment in practice
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Over 44,000 schemes (March 2012)
Over 2.0 million pension customers (March 2012)
Range of clients from small employers to PLCs and
across all sectors
One of the most financially secure providers in the
UK
A rated by key rating agency Standard & Poors
About Scottish Widows
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Current Scheme vs New Scheme
Pension Scheme Current New
Clerical Medical
Group Stakeholder Pension
Scottish Widows
Group Personal Pension
Allocation rate 100% 100%
Charges 1.0% AMC
(core funds)
0.57% AMC
(core funds)
Investment choice
- Default investment
32 investment funds
Noneindividual choice
120 investment funds
Balanced Pension Approach
Contributions Employer - 6% of BAS
Personal - voluntary
Employermatched up to 6%
Or
Phased contributions (4 yrs)
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Contributions phased in over 4 year period
Up to to 30 Sept 2017 Employer 1% Personal 1%
1 Oct 2017 to 30 Sept 2018 -Employer 2.5% Personal 2.5%
From 1 Oct 2018Employer 3% Personal 4%
Contributions based on ALL pay
Personal Contributions paid net of basic rate income tax
Annual Contribution allowance 2014/15 - 40,000
Employer contribution of 3% after 4 years
PhasedContributions
Personal minimum contribution of 4% after 4 yrs
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Tax Relief on Personal Contributions
Tax Relief on your contributions
Services provided
Higher rate tax claimed throughself assessment or via coding
Services providedExample: Employee earning 20,000 per annum - initial 1% contribution
Collected via Payrollnet of pay
Monthly payments example
Employer pays 16.67
You only pay 13.33*
Your tax relief 3.34
Total paid in 33.34
*Basic rate tax relief at source
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Investment Attitude to Risk
Risk v ReturnHigh
Low
Low
High
Potential Return
RISK
Cash
Gilts
Corporate Bonds
Property
UK Equities
Global Equities
Regional/Specialist
Emerging Markets
Individual Shares
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Investment Options
Three risk-based Lifestyle options
Adventurous
Balanced (Default)
Online Investment decision maker
Ongoing Governance
Cautious
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Managing investment risk to retirement
Stage 1: 15 years or more to go
Going for growth
Stage 2: 15-5 years to go
Gradual risk reduction
Stage 3: last 5 yearsMaximising tax-free cash + pension
Adventurous Balanced Cautious
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Core Services - Employees
Employee
Memberengagement
Access toadviceOnline
management
Financialeducation
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Leaving Service
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Why save in a Pension
Employer contributions
Tax Relief
Control and Independence
Longevity
Build a retirement fund (replacement for earnings)
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How does it work?
Size of fund depends on:
Term of saving period
Amount of contributions
Investment Choice
Plan charges
Build a Fund for Retirement
Employer Contributions Personal Contributions
Tax Relief
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Choices at Retirement
Retirement Fund
Maximum
Tax Free Lump Sum
25% of fund
Purchase an annuity
(open market option)
Single life
Spouses benefit
Indexation
Alternatives
Phased
Income Drawdown
Third Way
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Potential Annuity Rates
Joint Life, 50% spouse, RPI 3% p.a. no guarantee - 3,379 p.a.
gross
Income from an annuity is taxed as earned income
Single Life, level with 5 yr guarantee - 5,578 p.a. gross
Joint Life, 50% spouse, level no guarantee - 5,250 p.a. gross
Individual Aged 60Pension Fund Value 100,000
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Projection of Benefits
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Joining Process
Policy issued
Log in details for onlineservices
Contractually joined orAuto - Enrolled
Joiner notification issuedIncluding opt out
Policy issued
Log in details for onlineservices
Joiner notification issuedIncluding opt out
AutoEnrolled orExpress an interest in joining
Current members Non members
Consolidation options
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Summary
After Adoption will contribute towards your plan
Low charges and access to a wide range of funds
You need to provide for your retirement
A pension is a tax efficient way of saving
Lucas Fettes provide advice and guidance
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Important Notes
Please note, this presentation has been prepared based on our currentunderstanding of UK taxation, Law and HMRC Practice.
The tax treatment of arrangements varies according to the financialcircumstances of the individual concerned. Past performance is notnecessarily a guide to the future returns and values can go down as well as up.Lucas Fettes & Partners (Financial Services) Limited is an IndependentFinancial Adviser authorised and regulated by the Financial Conduct AuthorityFCA no. 146279.
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